Long weekend reflections

I’m going to celebrate Easter by taking a break from the computer. Feel free to chat among themselves, or to post your own thoughts at any (reasonable length). Please remember to be particularly polite and friendly in my absence.

I had planned to treat myself to a round trip to Longreach in a single sleeper aboard the Spirit of the Outback.

Accordingly, I phoned the Queensland Rail booking number. Whilst I was waiting for an operator, the cheery recorded message exhorted me to “enjoy panoramic views” aboard the Spirit of the Outback in the bar, restaurant and/or a sleeper.

Then an operator answers. I tell him I’d like to book a berth on the Spirit of the Outback leaving Brisbane on Saturday 11 April. He tells me that this can’t be done, as QR has chosen Easter Saturday to subject the Brisbane to Rockhampton line to trackwork, and so any passengers from Brisbane to Longreach will have to be transported to Rockhampton by bus and join the train there. As well as the usual travails associated with long-distance bus journeys, the bus won’t be reaching Rockhampton to connect with the train until after midnight.

After all, there are non-trivial technical issues involved in rail track maintenance and unpgrading, and choosing a time to do them which entails the least interruption to passenger and freight services (although it’s still hard to see why QR couldn’t have chosen a more appropriate date than Easter Saturday). It’s not obvious that a change of owner would simplify or obviate these issues.

Actually from an engineering POV it is a very sensible time to do it – however badly communicated. Easter is a four day long weekend with low freight volumes, which allows long line closures for major maintenance to bridges, points etc. Also it is getting cooler now and closer to the mid point of yearly average temperatures, so track temperature expansion should be less of a problem, allowing continuously welded rails to be correctly tensioned.

QR does excellent quality track maintenance in my experience. Not like the old buckled track we have to put up with in SA and Victoria.

So far as I know, QR is also forced by concession deals with the State Govt to carry a lot of pensioners for free or concessional rates. This might give them a perverse incentive to mend lines as such times as these people want to take their freebies. Then again I might just be talking a lot of nonsense on this issue. I can’t claim to know enough facts about it.

Its realy the timing of the freight trains. Once you get outside the cities there are a dozen freight trains for every one passenger service. Plus they are longer and take longer to pass a hold point. So they look for times when there isn’t much freight to schedule shutdowns. Hence easter timing is obvious.

Uncle Milton, we in the Workers’ Paradise that is South Australia have privatised a lot of our formerly public transport, and I can assure you that customer service has not improved. Quite the contrary, in fact. It would have been difficult to believe, before the privatisation, that service could have got worse, but it did. (It happened when, under the influence of some powerful mind-altering substance, we voted a Liberal government in. The mongrels privatised our electricity and water as well, with similar results.)

I’m sure you would hear similar complaints from our comrades over the border in Victoria.

David#9
This is what we hear over and over isnt it? The mantra of privatisation. It will “improve service, lower prices, (and cure warts) and generally we will all benefits from “efficiencies found” if we just “privatise” this and “privatise that”…and its all garbage most of the time (and there is less employment generated when this firm or that firm provides a shoddy service or goes under and then sues government – ie us). It really makes my blood boil. It as if no one ever looks back to ask (evaluate????) whether it was better before the “privatisation” arrived.

There are times when I get really dejected and just think that corruption has seeped in to such an extent that its now a free for all over any public asset or public service (and that some entrepreneur or two who couldnt make a living running a private sector business, think they can do a better deal by doing business with questionable ministers and officials to get control of government business and a favourable deal net of kickbacks).

re: Broadband – I have tried several times linking to an article of mine one broadband – but the blog is only accepting one line posts without any URL…

Anyway – I’m trying now without an URL… The article on broadband is available at the
Left Focus blog… Just search for Left Focus… You might have to get to the blog via secondary links – as Google isn’t lisitng it directly…

If you feel like an escapist break, I highly recommend a visit to the cinema to see Let the right One In. Unfortunately it has very limited release but it’s the best foreign language, pubescent female vampire movie of 2008 by far.

While the headlines wail about unemployment it is worth while looking at underlying tendencies.

Debt and unemployment are caused by “macroeconomic imbalances”. (A vague term, because they cannot admit the real problem is capitalism).

To attempt to resolve “macroeconomic imbalances” it appears that businesses seek to

- cut general workers shares of GDP compared to “Gross Operating Surplus” (another vague term to avoid the obvious).

- cut wages (and the next few minimum wage determinations are going to be interesting)

- increase debt

- increase unemployment

- increase population to boost market

- move production to cheaper economic zones.

In this context it is useful to keep an eye on the ration of CAD to GDP – see ABS Cat. 5302.0 table 85 (series A2143249W). This is at negative 6% and trending down.

But importantly, it is net income that is doing the damage ABS Cat. 5302.0 table 85 (series A2143253L). This is at negative 4% and trending down.

So while the media and pundits scream their heads off about stock markets, housing debt, consumer debt, unemployment and wages etc. it must be understood that these are only symptoms and the real problem is fundamental “macroeconomic imbalances”.

If you deduct the bountiful 10 billion earnings from education exports (in CAD), the remaining performance of Australia’s economy is a unmitigated disaster.

Ultimately we are in trouble because we don’t make anything. History shows that protectionist states do best. Small nations, in particular, need to be protectionist or their manufacturing base is destroyed and the “farm” has to be sold off.

Point 1. We need to re-implement protectionist policies and rebuild a manufacturing base.

Point 2. We must stop exporting food and energy products (gas, uranium etc.) and keep them for national use against the coming world resource shortage.

Point 3. If the world economy falls off a cliff then simply repudiate and refuse to pay all debt except to major military allies eg. UK and US. A good time to do that would be when the USA repudiates all its debt to China as it will do inevitably.

Point 4. Pursue the transition to renewable energy as a matter of national urgency.

The softening up continues. Foreign Minister Smith and Defence Minister Fitzgibbon are talking ANZUS in Washington and an ‘informal’ request for more troops for Afghanistan has apparently been made according to ABC news. Of course nothing can be considered until a formal request is made we are told and our Defence Minister has said he has a list of prerequisites to be met including a bigger effort by NATO and a more clearly defined goal.
We haven’t heard Rudd on this much but back from the G20 with extra commitments from NATO, I am in no doubt that we will follow suit. It has echoes of Howard and Saddam’s WMD, the same drip feed. And what notice Rudd will take of any Smith/Fitzgibbon doubts, if any really exist, will be lost in a lot of chest thumping …just in time for an ANZAC day commitment.

really seanG, the reason that the computer is brought to us via capitalism is that we live under a capitalist system. That is, there is no other system available to us. Or are you trying to say that capitalism is the only mechanism whereby computers can be developed and delivered – something of a stretch.
Also, I’m thinking that you are assuming there is only one form that capitalism can take – the current form – and that alternate or hybrid forms are somehow incapable. Again, that’s a bit restrictive. Improvements are possible.

The computer you work with was not produced by capitalism. It was produced by overseas labour where wages (for the same productivity) are very low. This exploitation of overseas labour is economic fuedalism.

Under pure capitalism labour from any nation would be free to enter Australia. Under such conditions (free trade capitalism) you probably would not have a wage sufficient to buy a computer even though you toiled for hours making computer exports for sale in Europe or the US.

As in the 19th century, 20th century capitalism was actually based on an international division of labour, best understood as economic fuedalism.

Because profits are unquantifiable, capitalism underfunds basic research, the underpinning of all substantive progress.

The computer was not “provided” by capitalism, but is built of transistors, invented at Bell Labs, a publicly funded research institution. The Internet network that connects computers grew out of ARPAnet, a military (public funded) research institution.

I grow weary of uninformed assertions that only capitalism can provide anything, and that central planning can’t work under any circumstances.

Within a short time frame — such as a year or a quarter — the “invisible hand” is good at allocating resources and maximizing profit. That’s it. That’s all capitalism can do (and it should be employed to do this for unimportant consumer goods for which there are in fact numerous competing producers).

Note that maximizing profit doesn’t work well at all in producing resources (like water or electricity) when regulation is weakened and corporations are allowed to move toward collaboration (cartels) and raise prices and profits. Yet this is basically what the unregulated “free market” philosophy demands (including massive media consolidation for access to news and the “accurate” information which is the sine qua non of informed investment and the primary enabler of “working” capitalism).

In the longer time frame — such as a decade — capitalism builds the wrong cars and unusable houses, underinvests in critical infrastructure associated with energy, water, food, bridges, etc, and overinvests in shortsighted and dangerous misallocations of limited resources.

Corporations benefit in times of real and manufactured scarcity, and the oil industry benefits if the world continues to underinvest in alternatives to oil, gas and coal. Current corporate law (which demands that corporate boards pursue profits above all other considerations) have every incentive to give millions in campaign contributions and support pseudo-research efforts (inventing fake “controversy”) to maintain the status quo of increased scarcity and ever-rising energy costs.

Finally, the U.S. military infrastructure costs around $1Trillion per year, a very successful “centrally planned” economy that is larger than most countries — and giving the lie to the fallacy that central-planning can’t work.

It should be obvious in the current economic crisis that capitalism can’t protect itself, let alone provide basic health care to people — and to give free-market capitalism the opportunity to control water and continue to control energy is madness.

Capitalism is a mode of operation. It is not a total system. Community is an entity which encompasses a total system. Capitalism is method for achieving the objectives of a community. Communism is another method, though capitalism is more dynamic as it tends to allow better for individual expression. Communism is a product of the need for community cohesion. Planning requires communal effort. Execution of plans ultimately requires individual effort. So in communities we see a flow, a process, of communal agreement, with the aim of maintaining social cohesion, which utilises community (communism) to perform such work as is required to maintain the community structure. Such work is ultimately executed by individuals who can operate under total guidence of the community or can cooperate guided by their own initiative to achieve the objectives of the community.

So this whole captitalism/communism argument is really about where does the community end and the individual begin. As with all things in life it is about balance. Total community is individual oppression. Total individual expression is anarchy. Neither extreme is conducive to workable community. Within each extreme the seeds of the other will quickly appear because the human condition requires social connection, stability for family, and individual freedom for creative expression.

But. The human condition is a complex one, and there are very powerful forces that work to distort natural balance. These forces are greed, arrogance, ignorance, indifference, intolerance, and aggression. Finding community balance is a difficult process.

There are no cobwebs here, Chris, quite the contrary. It is important to strip away the clutter from time to time to see the underlying concept. What I see here regularly are endless arguments using marginal effects attempting to move boundaries and redefine concept. This is a common commercial negotiating device which has no place in structural discussion, yet is routinely the downfall of intergovernment intercourse.

“Under capitalism a part of society achieves its objectives by exploiting the rest” Not so. Exploitation is a possibility not a requirement of capitalism.

Simply takes you back to the beginning because these forces are caused by capitalism”

The forces are not caused by capitalism. They are natural possible outcomes of our humanity, which are visible in every child from a very young age.

“There can never be community balance between exploited and exploiter”

Absolutely there can be, and there is. It is wrong to assume that because a person gives over their time to be the vehicle of some one elses endeavours that the first is dissatisfied and/or disadvantaged by the arrangement.

My comment is to those who would have nothing but total and private control of everything in society, believing that this is possible.

As a retired engineer, I can flout my ignorance of law and economics and wish for pie-in-the-sky simplicity.

Why isn’t it possible to change corporate law, and render corporate non-disclosure agreements non-binding on externalities that are borne by the public at large?

Even without promise of reward for those (potentially few) who might come forward to reveal corporate malpractice, the fear of such illumination from those who would must preclude most corporations (risk-averse as all profit-seeking organisms are) from treading too far from social norms …

I imagine the Prosecutor’s Office of most States could have as a function the review of such potential cases, held under limited purview (protecting innocent corporations from fraudulent claims) and with the powers of subpoena to pursue relevant information under oath and with penalty of law …

If there was a limit on wealth creation where would it be. How many dollars is one dollar more than any one person can reasonably utilise in his or her life time?

If you leave this world without using up all the wealth you have created then isn’t that a charitable thing. Or would you prefer that it be mandatory to consume until it is all gone. He who dies with the most toys is a glutten, but he who dies with a big bank account has truely given.

Due to all the “free trade” propaganda these days, it is difficult for a lay person like me to dig up the sources again. I think you will find that during the periods of their greatest relative economic expansion (19th C and first half of 20th C) Great Britain, USA, Germany and Japan were all heavily protectionist. Protectionism was an important element (but not the only one) in their economic expansion.

From Wikipedia. “Beginning with 1st U.S. Secretary of the Treasury Alexander Hamilton’s “Report on Manufactures”, in which he advocated tariffs to help protect infant industries, including bounties (subsidies) derived in part from those tariffs, the United States was the leading nation opposed to “free trade” theory. Throughout the 19th century, leading statesmen of U.S. including Senator Henry Clay continued Hamilton’s themes within the Whig Party under the name “American System.”

The opposition Democratic Party contested several elections throughout the 1830s, 1840s, and 1850s in part over the issue of the tariff and protection of industry. The Whigs favored higher protective tariffs which won the elections of 1840 and 1848 respectively. The pre-eminent economist in the United States at this time Henry Charles Carey became the leading proponent of the “American System” of economics; it had developed in opposition to the ‘free trade’ system which Carey called the “British System” as was proposed by Adam Smith and advocated by the British Empire. Carey’s book “Harmony of Interests” together with German-American economist Friedrich List in his scholarly work became widely read and disseminated in America and Germany leading the German Historic School economists to embrace a similar anti-free trade approach which was embraced by Chancellor Bismarck in the late 1800s.”

For a nation to pursue its own interests and maintain a balanced base of primary and manufacturing industry it must be protectionist. Any nation which allows “free trade” to destroy its overall viability and self-sufficiency is a nation of fools.

A young engineer was given use of 5 acres of his father’s land to do with it as he pleased. He decided to plant lettuce and set to work. As his crop grew he kept an eye on the market price for lettuce and daily calculated his future earnings. In the last days before his harvest every other farmer who had lettuces planted took their crop to market. The price fell, and fell. In the end he left his crop in the ground and went to work as an engineer, as usual.

However, as an “exploited” engineer he did very well. His knowledge was valued and he was paid well.

But. His wife left him for another man and took half his possessions. He slowly recovered from the losses, and when the firm for which he worked was shut down he was paid out handsomely.

There are various forms of exploitation in that absolutely true story. Now reconcile that with the definition of exploitation.

ex?ploit2? ?/?k?spl??t/ Show Spelled Pronunciation [ik-sploit] Show IPA
–verb (used with object) 1. to utilize, esp. for profit; turn to practical account: to exploit a business opportunity.
2. to use selfishly for one’s own ends: employers who exploit their workers.
3. to advance or further through exploitation; promote: He exploited his new movie through a series of guest appearances.

You would have to be cherry picking your examples to justify an argument that capitalism REQUIRES exploitation of the meaning 2 above, which by my reading of your comment is what you have in mind.

More than half of all business is performed by individuals in small family businesses who comply with all of the standard processes of capitalism, and in general do not “exploit” their staff. And there are 2 reasons for this. One is ethics and empathy, and the other is competition. There are, of course those who do exploit. But as I said, it is not a requirement of capitalism, it is apossibility and a choice. Most are happy, and lucky, to get a fair return on investment. I think that in the near term there will be many past business closures where insufficient profit, in the glow of the past 10 year investment boom, was sited as the reason (not eploitative enough), which will be reviewed as solid business thrown away.

And the appliance manufacturing business with 100 years of history, an Email factory, that the young engineer worked for was just such a business.

Email announced its intentions on Tuesday last week to sack 474 employees from its Hoover, Meadowbank factory in Sydney. Email wants to close the Meadowbank factory and move some of its production facilities for washing machines and clothes dryers to Beverley in South Australia, amounting to a net loss of 174 jobs.

This comes after a series of sales and acquisitions in the Email group which have destroyed a large number of manufacturing jobs. Hoover workers have voted to fight the job losses and will campaign to save jobs.

Multinational rationalisation

Since 1954, the Hoover factory at Meadowbank has been manufacturing washing machines and other products. A subsidiary of the US company, Hoover, it merged with Chicago Pacific in 1985 and Maytag in 1989.

In 1994, Hoover Australia, was to be listed as a public company with a six-monthly operating profit of $8,850,000. This sparked a fight between Email and Southcorp, two of Australia’s largest white goods manufacturers for a commercial sale.

Both were eager to strengthen their market share and further monopolise the whitegoods industry.

By December 1994, Southcorp announced a successful bid to buy Hoover, Australia. In March, 1996, Southcorp began a big rationalisation, sacking workers in maintenance, stores, administration and supervision at the Hoover factory.

At the same time, Southcorp was announcing a big increase in their share price. In April, 1999, the sale of Southcorp Appliances, including Hoover, Dishlex and Chef, was official with Email now obtaining a conservative 60 per cent share of the Ausralian white goods market. A black day for all Australian workers.

Uncovering the myth

Both Southcorp and Email have been claiming for some time that the Hoover factory at Meadowbank has been losing money, that it is unproductive and inefficient. They claim the loss is about $9 million per year.

Prior to the Southcorp buy out, Hoover Australia operated as a US subsidiary with its own administration, sales and marketing, large maintenance and engineering departments, a service division and a much larger production workforce.

At this time, in the early ’90s, Hoover was making healthy profits, as a result of investment in new technology and machinery through the late ’80s, followed by a big drive towards quality improvement combined with a very flexible workforce.

After the Southcorp takeover, a culture of fear was introduced based on a widespread campaign to strip all the indirect labour from the workforce, and a myth that the factory was inefficient and unproductive.

Every month it was reported the factory was losing $1 million or more. Morale at the factory went into a downward spiral.

This was followed by decisions to stop production of barrel and upright vacuum cleaners, next was the end of the front loader washing machine.

Vacuum cleaners and front loaders were replaced with imported products, the plastic moulding production was contracted out, the factory was being stripped of production, volume and jobs.

A cost reduction campaign followed with good quality components being replaced by inferior cheap components and a complete breakdown of any real preventative maintenance program, which gave way to a large number of machine and equipment breakdowns.

The reality, rather than the myth, was the Hoover Meadowbank site was being run into the ground by corporate decisions. If Email’s decision to shut the factory and relocate washing machine and dryer production to South Australia is accepted, it will be the death of good quality whitegoods manufacturing in Australia.

More jobs threatened

A large number of small and medium sized manufacturing companies supply Hoover with components, from plastics companies, to electrical manufacturers and small engineering works; all depend on continued manufacturing at Hoover for jobs. The roll-on effect would mean that if Hoover closes its gates a total of 1,000 jobs could be lost to the community.

Media manipulation

Email’s public relations department has used the media very well, with its sizeable advertising budget it brought the dreaded Telegraph and Channel 7′s Today Tonight program into the factory with a pre-written script of doom and gloom and presented the factory’s closure as a fait accompli.

Any workers with a different perspective or a union view were not reported.

However, some sections of the media, in particular talk-back radio and the ABC, have been good in covering all sides of the story.

The Executioner

Southcorp and Email have been up-front about their intentions to rationalise the whitegoods appliance industry and reduce jobs.

Even so, the Liberal Federal Government and the Australian Consumer and Competition Commission, led by the notorious Professor Alan Fels, have acted as the executioner of Hoover jobs, giving Email permission to purchase Hoover from Southcorp with the full knowledge that Email’s intentions were to monopolise the Australian appliance industry.

This decision came on top of widespread speculation that Fisher and Paykel, the only remaining whitegoods manufacturer, wants to shed its appliance business.

With Email the only interested party in the purchase of Fisher and Paykel’s Queensland factory, Email would be a single monopoly player in whitegoods in Australia, and probably in New Zealand.

This would allow them tremendous power in price fixing and control of the Ausralian market.

Devastating impact

Email’s sales and acquisitions have had a devastating impact on the manufacturing industry and a massive loss of jobs. Through the 1980s Email left behind it a trail of job losses and factory closures — all a part of government policy to rationalise the whitegoods industry from 16 manufacturers to three.

The position now is likely to be one whitegoods manufacturer: Email.

Email in recent times has sold its industrial air-conditioning plant, Mullers, at Kingsgrove with job losses, its kitchen appliances, Fred Clarke, with job losses and is trying to sell Dorf in Victoria. Part of the Southcorp sale of Hoover to Email was an agreement that Southcorp would close the Hoover refrigeration plant at Clayton in Victoria.

Everywhere we look, Email’s record spells massive job losses with many workers becoming permanently unemployed, part-time workers, or forced into early retirement.

Defending jobs

Stop work meetings of Email workers have been held across NSW, at Hoover (Meadowbank); Element and Tube (Botany); Gas Meters (Waterloo); Distribution (Riverwood); Bisalloy (Unanderra); and at Refrigeration (Orange).

Stop work meetings of all Email workers have passed resolutions condemning management for their decision to close Hoover and supporting the retention of jobs.

A national meeting of Email union delegates, convened in Sydney last week, called for a halt to job losses and asked for the support of Email workers in South Australia.

Email workers are being called on to give support to an industrial campaign.

Community campaign

Hoover workers need the support of the wider community and pressure on the NSW Government to save manufacturing jobs.

A public campaign to shame Email, with posters, badges, a leaflet and press releases to local media and community groups is being planned.

A boycott of Email products and letters to Email Corporate are an effective way individuals can express their support.

For every job lost at Hoover, there is a flow-on effect in the local community, we need to take a stand against job losses now.

Yet another monopoly takes control of the small Australian market…so easy to monopolise isnt it?

Especially when governments stand back and do nothing in the name of “free markets.” This attitude and dogma (and an almost hands off approach to enforcing real competition laws let alone the ineffectual competition laws that do exist) of the prior coalition government is still being perpetuated by current liberal party shadow ministers. The market will sort it out. Of course it will. It is sorting it out…into increasing monopoly control in many industries in Australia, with the inevitable shrinking job market (and the faster the job market shrinks, the easier it is to become a monopoly supplier).

I wont exempt the Keating government from this sorry state we find ourselves in now. They introduced the culture of de-regulation in the 1980s and went two or more steps too far with it, but it was the Howard led government that really took the use out of it by taking it to an extreme.

At times I would like to ask the question “does not one current sitting coalition member recall that it was Menzies who said that people needed protection from Monopolies??”

There is no point in trying to shame Email. They don’t care. The appliance industry is tough competition in which the very best of creativity is necessary in order to succeed. And Email just don’t have that. My second job out of high school was at Metters limited in Bankstown. They had 1100 people on that factory floor. Later Email bought Metters and the first thing that they did was fire all of the sales staff. Those people all got jobs with Metter’s competitors and took all of the business contacts with them, crippling Metters, and causing its closure. Oops. I heard that story from the then head of Email when he visited another company that Email had acquired. A company to which I was a supplier. Appliances are a tough business. The dishwasher plant in Orange before it was shut down was automated to the extent that there was just 20 minutes of human time involved in the manufacture of each dishwasher. Fisher and Paykel, another highly automated manufacturer have abandoned New Zealand completely apart from their machinery manufacturing division, PML, I believe.

Email’s problem is another syndrome altogether. It is what happens when entirely the wrong people gain control of a business. It is like putting Harvard law graduates in charge of the military. So shaming Email? Waste of time. The body of the business is fine, it is the brain that is dead, in my opinion.

It is a bit late for the unions to start bleating about job losses. The whole process was kicked off by the Labour party’s darling Gough Whitlam, who caused the shutdown of whole industries with absolute glee. He was attacking all of those horrible exploiting tarrif protected rich guys. He seemed to completely miss the point that they all employed people. Then he shot his mouth off about the Signals station in Singapore (where my sister was stationed) and caused that to be shut down (took one week). Then he covered up that Indonesian reporter incident. What a bufoon.

——————————————

So anyway your idea that capitalism is predominately a nasty people exploiter, when huge chunks are in fact struggling to survive, is a bit of a stretch.

I am a capitalist. I have 650 thousand dollars invested in my business. I employ just me. Please explain who I am exploiting.

Ikonoclast says “Ultimately we are in trouble because we don’t make anything. History shows that protectionist states do best. Small nations, in particular, need to be protectionist or their manufacturing base is destroyed and the “farm” has to be sold off.”

Ikon, the reality is the exact opposite. Small nations generally benefit more from free trade and are harmed more by retreating into protectionism.

Partly this is because a small country with a smaller population will find it harder to develop successful industries and economies-of-scale by relying solely on domestic markets than a larger nation. In addition, a smaller nation with a smaller pool of skilled labour and resources will naturally find it harder to become proficient in a large number of industries.

A smaller economy also benefits from open trade in that the world market is much larger as a multiple of its domestic market, so the potential gains from exports are much greater.

Imagine if you had a small town with a population of 100. And suppose if the people in the town had to choose between either producing everything themselves, or paying a tariff of perhaps 100% to have it brought in from elsewhere. That is the fate of a small nation that retreats into protectionism.

That is what trading blocks are for. The US is simply 52 different states that operate in some ways as 1 state. The EU is another emerging aglomerated state. Smaller states must seek like minded and locally placed states with whom to cooperate. The individual states of the United States trade very much amoungst themselves. Externally they have a protectionist mantle which they have called “Free Trade”. You can sell them one lolly tarrif free, but put ten in the one bag and you will discover what “Free Trade” is not. The US trades very freely in things that they do not use much of. They also have industrial standards for imports that even their manufacturers cannot meet.

So smaller states must seek out other states with compatible interests with whom to trade, while protecting their central and special interests.

Hmmm…if it is free trade, then why does it need an “agreement”? An agreement implies some kind of constraint, whether explicit or implied, upon the behaviour of the agreeing parties. And why does it involve governments? If it is free trade, then governments should have nothing to do with it?

Is drought relief really just a subsidy, clothed as charity? Australia has been in drought across much of the farm land for an awful long time now – when does a prolonged drought stop being drought and becomes the new “normal” climate?

Why can’t non-Christians watch “The Insiders” on this particular Sunday? Afterall, it is “my ABC” so they keep telling me.

And why do Aussies take 40% of their “sick” days on Fridays and Mondays? Do we really like our long weekends, or are we just crap at statistics?

What is it about beetroot, hamburgers-with-the-lot, and white T-shirts…?

If you use your funds to employ a worker for a wage of $30,000, and your business produces $60,000 (extra $30,000) then provided you work as well, there is no capitalism. As Alfred Marshall indicated [following Adam Smith], the extra $30,000 is wages of management and superintendence [Principles of Economics Ch. VIII, p506, MacMillan].

However if you think, bugger this, I am going to use my 650,000 to do better than this for me.

Look at the unemployment, I can now get wage labour at $25,000 – this gives me $35,000.

This politically imposed transfer is capitalist expropriation.

Then to make matters worse, next year, a capitalist will try to invest 655,000, and will demand increased population to cope with more production.

Unfortunately where the was $60,000 for final consumption expenditures, there is now only $55,000, so our capitalists introduce debt, so markets will clear.

So the next year population increases, debt increases, wages fall, but the amount of capitalist funds seeking profits increases.

This compounds year after year. In fact, under capitalism, the circular flow never balances, and macroeconomic imbalances increase.

Chris, you have bigger fish to fry than me. Take it up with Wikipaedia.

Capitalism according to wikipaedia

“Capitalism is an economic system in which wealth, and the means of producing wealth, are privately owned and controlled rather than state owned and controlled.[1][2] Through capitalism, the land, labor, and capital are owned, operated, and traded by private individuals either singly or jointly,[3][4] and investments, distribution, income, production, pricing and supply of goods, commodities and services are determined by voluntary private decision in a market economy”

I use automated machinery instead of employing (exploiting in your terms) labour. This is how I stay competitve. And by my reading of the definition, that makes a non exploitive capitalist.

Now, you’re going to say that that is just one operator, and therefore a marginal effect. But you would be wrong. There are hundreds of thousands of businesses similar to mine. Use of automated machinery is one method of being a nonexploitive capitalist. Having partners is another. Family businesses, common in agriculture, are another form.

The simple problem with your perception of capitalism is that it is possible to have an entire economy where no-one is externally employed, where all productive investment is privately owned and personally managed and operated. If that is not capitalism, then you will have to come up with a new name. If it isn’t capitalism, and it isn’t communism, then what is it?

May I suggest that you adjust your understanding of capitalism, and finally recognise that

From Wikipedia – “Capitalism is an economic system in which wealth, and the means of producing wealth, are privately owned and controlled rather than state owned and controlled.”

Capitalism is about ownership not about markets.

Open transparent free markets provide an efficient algorithm for the distribution of resources within a particular market be it groceries or energy.

The problems with capitalism arise when the system does not allow open transparent free markets to operate. This normally happens for simple structural reasons where some people take advantage of the rules and market distortions to advantage themselves.

The worlds financial markets are distorted by the bizarre way we increase the money supply by allowing banks to lend money they do not have. The reason this happens is that it favours those who have assets against those who do not. Changing the way we increase the money supply to advantage those who consume fewer resources (or pay people not to consume) will rapidly change behaviour and lead to a sustainable society.

It is all so simple and it will satisfy both the capitalists and socialists. It solves the problem of the Tragedy of the Commons where individual advantage leads to community advantage.

The current rally on Wall St is not the first stage of recovery. Its the last stage of the rip-off.

About two weeks back I predicted that the rally in US stocks, which had been underway for a couple of weeks, would continue if the Geithner plan was accepted. But that the rally would not have long legs because the Geithner plan was a patch-up not a proper reform.

I am depressed by the Rescue Plan Mk III(?), but not suprised. Nationalising the big banks means shutting the MoU’s out of potentially the biggest capital gain in recent history. Pardon self-reference (comment on previous post) as this conclusion pretty much draws itself: “They also probably figure they want to be in on the ground floor when the stock market recovers.” Which they will promptly bail out of at an opportune moment.

So far the rally appears to be following this course since it is based on financial, rather than factoral, improvements. It could last for a while, especially whilst interest rates are so low. No doubt there are some bargains out there.

Call me an unrepentant bear but I am not convinced that it will be sustained. It will ultimately run out of steam because the underlying state of the US economy and fiduciary is so bad. Neither the bail out or stimulus address the underlying US economic problem, which is the huge legacy of debt linked to unsustainable investments.

The massive public sector debt injection just kicks the problem down the road. Sometime the US will have to recognise that its standard of living has to fall, through tax-hikes or consumption cuts. Its that simple.

I am not the only one who remains skeptical. Soros argues that the rally is a false one. And he has form, more so than Taleb.

George Soros, the billionaire hedge- fund manager who made money last year while most peers suffered losses, said the four-week rally in U.S. stocks isn’t the start of a bull market because the economy is still shrinking.

“It’s a bear-market rally because we have not yet turned the economy around,” Soros, 78, said in an interview yesterday with Bloomberg Television, referring to the recent rebound in stock prices. “This isn’t a financial crisis like all the other financial crises that we have experienced in our lifetime.”

Krugman also believes that we may get a false recovery with the run-down of inventory stocks leads to a spike in production. But that this will not presage an economic recovery as final consumers are still tightening belts.

Eventually investors will realise that economic growth will not validate stock price increases. So the smart money will sell-out leaving another crash for Treasury to bail-out.

Nothing is more anachronistic than a capitalist pretending that machinery is some innocent source of their profits.

This was debunked years ago, as steam machinery led to mass destitution in the 18th century English countryside and industrial towns such as Manchester and Liverpool. Charles Booth and Charles Dickins both graphically depicted the ensuing trends. Workers fled to the New World, where a hundred years later the same trends emerged.

Any high school student will tell you – machinery only provides a temporary, artificial profit. It is competed away when all producers adopt the same technique. Unfortunately they tend to use debt to fund machinery purchases. The debt lives longer than the profitable opportunity.

Capitalists can only maintain profits by restricting the rights of other producers to the same technology – licences, copyright etc.

Machinery tends to increase depreciation and maintenance costs as well as funding costs. It therefore tends to drive concentration in an industry and increases the degree of monopolisation – and consequntial loss of efficiency.

In general Australia does not produce machinery, but usually imports it. Relying on machinery also is a false dawn because the same machinery can eventually be used by cheaper producers offshore due to oppressed offshore wages.

As a person unemployed ,as I was, and still am,in another classification, I find remarks about Capitalism and Socialism, very strange,when it is entirely possible to remember something more basic than these two apparent opposites!? As an unemployed person the opinion of the Capitalist here,doesn’t bother me at all!I can probably walk past his residence,freely and enter his business premise,that maybe deemed a public place,in part whilst open for business.If he is producing something I can use directly,or, indirectly by recommending to persons under my influence I could end up being employed.I could be paid by him to be at places to sell his product on commission,without costs accrued to myself. I could still end up being unemployed,and it is likely his business could still continue,and him feeling a stronger sense of obligation to the unemployed, because of a human quality not at all mentioned in any definition of a Capitalist.Where as I see him as a Enterpriser, and he will make up his mind about everything he can and then some. As an unemployed person,I will and do try to at least endeavour to be a non-sheep. From my readings of Scientific American ,it was clearly possible to automate factories completely in the 1970s..they same and more pressing problems of how individuals live their lives intelligently and feel OK in their lives is still a major requirement and problem. I would rather the Capitalist here exploit his machine to the fullest,and generate wealth for himself,than a mindless moron who will not argue his or her case and hide behind Association membership. Businesses, small businesses dont actually last that long as entities in Australia.One of the possible number of reasons why that is,is a lack of sharing about ideas,without commercial consideration first,including from the unemployed to the owners of the means of production.If this sharing is intentional and unexploitative even if the unemployed remain unemployed, then the result of the productivity may mean tax is still paid and thus welfare has its place. Surely most Australians even the unemployed,know exploitative businesses that are not that on a direct or indirect basis,but as part of a larger consideration called the economy become that.

Today’s Sydney Morning Herald has some quotes and photo of Kilcullen and his thoughts on Pakistan.This sickened me some what.To see an Australian making claims about the state of a place like Pakistan almost declaring its a wild failed state is to me at least,completely unacceptable. Certainly Pakistan isn’t Australia, but I still think maybe its safer living in Pakistan than the U.S.A.I cannot understand why the Americans think it is important to be influencing events that are Pakistani.I don’t accept the Nuke Weapons as an excuse to be highly critical and want to be on the offensive in either Pakistan or Afghanistan when it comes to the Talibani groups,more so with drones and bombing.The latter being the usual defiance of the U.S.A. of the living both military and civilian.A whole lot of deceptive ideation and activities keep spurring on this war against people who may simply just dislike the U.S.A. and those, now, who support their efforts.The Pakistani ISI from other sources other than Murdoch etc. are not as is painted by Murdoch..a lot of matters need clearing up about organizations and individuals in both Pakistan and Afghanistan. There needs to be a counter argument of a civilian type rather than Kilcullen’s implied sense that meeting the U.S.A. expectations of Democracy human Rights and behaviour should and could be met by increased military presence. The Taliban has not been polled,[ about what should happen to them and other tribal groups], by the same groups that assure the confidence of the Australian Kilcullen gets publicity. A sad day for Australia today,to see an active attitude ready to defy the basis of the living in two countries.I think Kilcullen should come home immediately or give up his Australian passport and seek American citizenship. I do not want to criticize active Australian soldiers,which is a different matter entirely.

Monkey’s Uncle, the actual reality is that small nations all over the globe and especially in the 3rd world have been destroyed by Western so-called “free trade” and driven into ever greater poverty. This was even the experience of India and China until they threw off Western domination.

Of course, what the West calls “free trade” is actually the various forms of imperialism. To believe that economics exists outside of politics is the most naive stance imaginable. So-called free market economics has always been backed by political and military power.

Nations which get tricked into the trap of only being primary producers of foods and raw materials are in the weakest position imaginable with respect to global power politics. They lack self-sufficiency. The “foods” grown are often monoculture cash crops for the international market (like coffee, sugar cane), leaving the local populace unable to feed itself except by imports.

The lack of manufactures means the tools of primary production need to be imported. The overall lack of heavy industry means no industrial base to support itself in times of trade emabargoes, blockades or wars. Such a nation is totally at the mercy of international conditions in general and the manufacturing military powers in particular.

This is the position China is seeking to place the rest of the world in as the world’s manufacturing capacity gravitates to China. China are seeking to make this the Chinese century. They will fail however just as the Americans failed to make it the American century. History shows that no single imperialist nation can ever dominate the entire globe.

I call Australia a small nation due to our small population. Anything much smaller than Australia is a non-starter in this debate; a nation in name only. We definitely need to reimplement protectionism, albeit selectively, as we decide which industries we need to have to be a well-rounded, predominantly self-sufficient nation.

hi john after a very long and pleasant weekend I find myself wondering why dont we have more public holidays? My friend replied “it would be too expensive”. Is it really true that the quality of life for an average australian would be noticably affected by say 50% more national public holidays?

That is not clear enough, Chris. So far you have said that I am not allowed to use machinery and I am not allowed to make a profit. You’ve intimated that if I make a profit at all it is really the property of workers (your Fred Wright story). You’ve also said that if I did make a profit from the use of machinery that it would be temporary, and I would be straddled with debt long after the profit had disappeared. By your opinion I am not allowed to buy any further machinery, should I have the money in the bank saved, from overseas, which, presumably, also means that I am not allowed to sell the machines that I make overseas as this would be unfair to the economy of those countries.

You’ve left me completely unclear as to how I am allowed to proceed. You have to tell me what I am allowed to make, who I am allowed to sell it to, what methods I am allowed to use, and how I am going to earn money to feed my family since I am now not allowed to make any profit. I will also need to know what “fair competition” is, in case I am being unfair to someone else’s business.

Tariffs should be applied when the full costs of trade have not been accounted for.

By full costs I mean carbon/AGW costs, pollution costs, resource depletion costs, future costs of new technology needed because of the forementioned, all human costs such as loss of livelihood or poor working conditions, costs to future generations such as an impoverished ecosystem and excessive debt, there’s probably more.

For example, because very few of these costs are accounted for in the transport of milk from Qld or Vic into SA, and SA is quite capable of growing its own milk, there should be a tariff on imported milk to SA or a return to a regulated milk industry.

tariffs between states cannot be supported as, presumably, labour rates and environmental standards are the same between states.

However if one state setup a special export processing zone (say the Kimberly, or Christmas Island) where Vietnames wages and Indian working conditions applied, then tariffs would have to apply immediately between this export zone and the rest of Australia.

“By full costs I mean carbon/AGW costs, pollution costs, resource depletion costs, future costs of new technology needed because of the forementioned, all human costs such as loss of livelihood or poor working conditions, costs to future generations such as an impoverished ecosystem and excessive debt,”

Apart from pollution (including CO2), how are you going to measure these costs?

“tariffs between states cannot be supported as, presumably, labour rates and environmental standards are the same between states.”

Jarrah, if it’s too hard to measure costs then whack a tariff on and end the trade. My position is that there is far too much trade back and forth across the world for the reasons I mentioned. It’s likely that a practical aproximation can be made for all of the costs but the real problem is the political will to apply them.

Australia farms unsustainably and is severely damaging it’s own ecosystems to feed countries which have long ago over-extended their ability to feed themselves.

On a slighly different but related topic, Sir David Attenborough has become a patron of the Optimum Population Trust, a group seeking to cut the growth in human population. Onyer Sir Dave.http://news.bbc.co.uk/2/hi/uk_news/7996230.stm

If you were a well ran profitable company actually making things .. you were ate. Either by a multi-national or by a leveraged buy out into a private company.

Then you were shut down, loaded with debt, etc, etc, sadly very etc. Even the ‘best’ takeovers were starved of R&D and investment, plus had lots of debt.

This was the final phase of ponzi capitalism eating itself. Success meant you were a target for, as we now see, destruction. Though some people individually cleaned up.

Essentially success meant failure. Even if, somehow (e.g. Qantas) you escaped this fate it was only by copying the methodology, so you became the same anyway.

Which is why, now all the chickens have come to roost, so many companies are just going belly up seemingly overnight. They are loaded by debt, have no reserves and ran by people who have no ideas beyond their next bonus payments.

Sadly this means that we haven’t even started the collapses. Whole sections of the economy are going to disappear, including some very big names. Ford and Holden are gone for example. At least a couple of the smaller banks and possibly one major.

But the real damage is going to come from all the medium sized manufacturing businesses and retail. Just those alone will push unemployment into the 15% region (reported, true rate = 25%).

This creates a destructive cycle for a debtor nation like ourself. The import replacement/export industry crashes increase our current account deficit. People being fearful and not increasing debt means retail goes under.

The tension between the 2 will continue for a while (one reduces imports, the other increases the net deficit).

Eventually we face rising interest rates to protect the dollar as the current account completely blows out and external finance dries up. Then we go into 20%+ reported unemployment (actual = 30%+).

Nothing new about this, it happened back in the 30′s. Along with the US and Germany, Australia suffered worse than most other countries, a debtor nation dependent on declining commodities, with low skills and a moronic elite plus up to its eyeballs in debt = a 3rd world nation.

Maybe, just maybe this is not a Minsky event, rather a Marxian one.

In figurative terms, we didn’t just put on heaps of fat, while our muscles shrank, skeleton thinned and our brain atrophied. We then decided to eat our arms and legs.

Further to my comment about cancellations of the Brisbane-Longreach train service on the Easter long weekend due to track maintenance, I can now report that I attempted to book the same journey for the Labor Day long weekend, only to be informed that the service would also not be running on that weekend, once again because track maintenance had been scheduled for that weekend. The email informing me of this fact very kindly informed me that I would be able to make the journey on the four working days after the Labor Day weekend, which is a fat lot of good for someone who is working full-time in circumstances where I can’t absent myself from work for four working days in May without seriously discommoding my students and colleagues.

The internet started life as a means of communication between a few – but then those nasty entrepreneurs and engineers put together code that allowed people around the world to come together in a way never before imagined.

Do you think Apple is a government-owned enterprise?

The great thing about a capitalist economy is that government funding in basic research can be employed to by the private sector, improved, expanded upon and indeed the private sector themselves often my paradigm changes in technology!

But my question stands to those who like to bash the capitalst system: what do you replace it with?

The internet started life as a means of communication between a few – but then those nasty entrepreneurs and engineers put together code that allowed people around the world to come together in a way never before imagined.

Leaving aside the absurd equation of “engineers” and “entrepreneurs” (the first group, not the second, were responsible for TCP/IP etc), which pieces of Internet code contributed by for-profit companies do you have in mind? The code on which the Internet runs was, and remains, non-proprietary, and the same is true for the other key elements such as the domain name system.

The code for using browsers made the internet accessible to millions of people. The algorithms and other codes used by companies such as eBay, Amazon, Google etc expand on what the internet can achieve from the basic sending messages to buying and selling goods and services, allowing niche markets to find a consumer base, and actually leading to a greater specialisation of jobs with commoditised work (eg. basic accouunting) being sent offshore with the internet used as a means of communication between the offshore office and the headoffice specialising in higher value-adding services.

I added entrepreneurs and engineers because what we have found is that in the first few years of the internet boom there were many people who were tech-savvy but lacked that understanding of how to run a business but now that is changing with entrepreneurs who are not as tech-savvy finding both capital and technical experts (software engineers etc) who can carry out a lot of the manual work.

Further, it is the free flow of capital in the form of seed, venture and equity capital which has allowed the internet to flourish. The idea of communicating between two parties is larger than the internet with firms such as Bloomberg experimenting with online communication before the web browser but with technical experts, financiers who are prepared to accept risk and a rapidly growing market of internet users, the capitalist system transforms a mode of communication from a select few to being in the homes and businesses of millions.

You’ll need to do better than that, Sean. The first web browser (NCSA Mosaic) was developed by the public sector, and the main commercial browsers (Netscape and IE) were either direct derivatives or close copies. The first search engines were also created at universities. None of this depended significantly on venture capital, which didn’t arrive in a big way until after the Internet was well established.

Moving to the more recent past, the projects funded by venture capital in the dotcom era were mostly flops, while the most exciting innovations (blogs) for example, did not depend on these sources.

Obviously, in a mixed economy, for-profit enterprises like Amazon and eBay will take advantage of infrastructure, like the Internet, provided by the public sector. That’s as it should be. But it doesn’t change the fact that the services on which the Internet is based are derived almsot entirely from the public sector and the non-profit open source sector.

Underlying all of your confusion is the problem that you are using “capitalism” to refer both to the existing mixed economy and to an idealised market economy. As regards the first sense of the term, I’m not suggesting abandoning the mixed economy you call capitalism, just expanding the role of the public sector. If you want to make a case for moving in the opposite direction, talking about products of the public sector like the Internet (or computers) won’t help you. Why don’t you focus on all the marvellous innovations from the financial sector, like CDO-squareds .

Firstly, venture capital did fund some bad projects. That is what is referred to as risk. That is, the risk that projects are completely worthless. This is something which is endogenous to any venture capitalist and to the economic system – private or public does not matter in those circumstances. Also, there is a difference between seed and venture capital. The former is far smaller the latter more significant. The former can be enough money for someone to buy equipment, for instance.

Secondly, the internet is a method of communication but it is one method of communication. Bloomberg terminals have been around for years and are another method of communication. As is wireless technology. Did Mike Bloomberg need government intervention to help him establish himself? No. But Bloomberg terminals were an early way of establishing connections between different parties. They were far less pretty than the model constructs but they did work.

Thirdly, explorer programmes which were improved by the private sector did more to turn the internet away from the domain of a few than anyone else. Can you categorically state that the public sector would have done a better job? If not, then what you are saying is that the private sector has managed to innovate faster (and better?) than the public sector. It took an idea and expanded it to it’s full potential.

Fourthly, the private sector in the United States during the boom years laid down billions of dollars worth of fibre optic cable… all without the internvention of the public sector. This private sector innovation (fibre optics have been around for a while) was thought to be wasted because of the internet bubble bursting but have lead to the increasing commoditisation of certain types of jobs (think of Schumpeter’s creative destructionism).

Fifthly, the private sector has innovated beyond that into wireless technology and communication. Did the government dictate that there should be wireless technology or did a group of engineers come up with a good idea?

Finally, non-profit open source systems are not public sector directed systems.

——————————————

The private sector has created some horrible products. But like natural selection these products will die out to be replaced by something else.

The capitalist system has led to innovations that cannot be dreamed of if we had the large public sector that ProfQ and others have advocated. The reason is that it is only in a private-sector focused mixed market economy can ideas from the public sector be filtered through to the private sector to be taken to it’s full potential or logical conclusion. That is why the Soviet Union invested heavily in education, research and development only to have tractors from the 1920s still used, people queuing up for food and to have a worse standard of living than those in the west.

The Government is needed and for no other reasong that the basics in education can be provided to make these innovations possible. But government alone cannot diktat innovation.

I just love to see this sort of one-sided argument. This is Tony G at #71

“The old Soviet Union, North Korea and NSW are good examples of what happens when you expand “the role of the public sector”. The GFC is an example of the public sector asleep at the regulatory wheel.”

But why wouldn’t you use the Japanese, Icelandic, and American economies of examples of what happens when you expand capitalism?

No one believes that the GFC is an example of the public sector being asleep at the wheel. Attempts at public sector regulation were opposed (and in fact prevented) by well funded capitalist lobby groups and political interests (and media).

Tony G is not a sophisticated punter – so is not aware that the North Korean system is not representative of a “public sector” as we understand it in the West. He is engaging in base opportunism.

In Australia, the transfer of the Commonwealth and State Banks from the public sector to the private sector, has left the Australian interest jeopardised by capitalist greed.

Economists in Treasury, the Industry Commission, and the university lecturers who peddled nonsense economic theories to them as students, have to share the blame.

Any economic system can produce wonderful growth and consumer goods if it just piles up debt to the tune of $11.6 trillion (the current amount of bailout needed and for just one crappy capitalist state). See:

Ah Chris what we see is ‘capture’. Govt’s (local, State & Federal become captured by vested, and always rich, interests.

Capture is not just corruption, though there is a lot of that, it is also the dominant belief system, the prism that the ‘leaders’ see the world through. Remember that old slogan “what is good for General Motors is good for the US”, well it wasn’t really, but it did show capture.

Corruption can become systemic – where the whole system is corrupt. This does not mean everyone is one the ‘direct’ take, it can be indirect in many ways. From the senior bureaucrat thinking about directorships after they retire. The politician needing campaign finances. The young Treasury or RBA intern, watching that if you spout John Quiggan or Steve Keen how quickly your career prospects plummet to nothing .. or McDonalds if you are lucky. The ‘think tanks’, of some clown does not spout their rubbish in Latetline, then they will be replaced by someone who does … ditto the ‘industry economists’ you keep seeing on the TV all the time. Academics who don’t follow the party line don’t get funds or tenure.

Piece by piece a dominant view become entrenched. Nothing new about it, we have just taken 30 years to achieve what Hitler, Stalin and Mussolini achieved in a much shorter time.

TINA – There Is No Alternative.

Tina – to massive and ever growing income disparity.
Tina – to endless wars.
Tina – to ‘there is no global warming or resource limits’.
Tina – to the ‘national security state’, where, including ours although we are not the worst, Govt’s can ‘disappear, torture, kill, monitor people’ at will. In the UK, the first free country in the World to become a total Police State in the 21st century, where even local councils can spy on you or bug you at will. Where anything that deviates from the ‘norm’ (translated whatever someone rich and powerful doesn’t like) means you become a target of MI5, FBI, CIA, ASIO and all those other letters that all spell the same thing .. ‘Gestapo’.

Japan became systemically corrupt in the 60’s. The UK in the late 90’s, the US in the 70’s. Us? Mid 90’s (though NSW has always been systemically corrupt for decades).

Once you get to that place rational decisions are impossible, because only decisions that benefit, for a short term, small groups of the elite are allowed, better options are not even conceived of. Eventually this leads to collapse and then oppression as the only way that the ‘system’ can continue .. though that only works for a while .. e.g. East Germany, Soviet Union, etc. Then final collapse.

Imagine what was inconceivable even a few years ago: Japan with people living in cardboard boxes on the street. Closer to home Victoria: a pipeline to nowhere, a desal plant that there is no money for and 1 .. yes one .. new train for a collapsing train system … while more plans are drawn up and billions are spent on toll roads. Nationally .. the Murray dying .. taking 40% of our agricultural produce with it .. while increasing population at breakneck pace .. and water reserves at historic lows.

“Once you get to that place’ ( OS refers to systemic corruption) ‘rational decisions are impossible, because only decisions that benefit, for a short term, small groups of the elite are allowed, better options are not even conceived of.”

We,in Australia, already see many signs of this. Worse in the U.S. now. There is, as you suggest, only one way this can end Oldskeptic…systemic failure.

But why wouldn’t you use the Japanese, Icelandic, and American economies of examples of what happens when you expand capitalism?

Most people (except Chris) would accept that there is a major difference between the living standards of the so called capitalist countries that you mentioned and your comrades in North Korea. If you weren’t so deluded , you might see that when the government is the economy as is the case in North Korea, you don’t have an economy.

No one believes that the GFC is an example of the public sector being asleep at the wheel. Attempts at public sector regulation were opposed (and in fact prevented) by well funded capitalist lobby groups and political interests (and media).

Chris what is the point of having a government if they are only to attempt
to govern.

Modern economic systems are regulated by governments through monetary policy.

When the government contracts out the creation of money utilising the practice of fractional-reserve banking, it is the governments responsibility to regulate that system and to ensure money supply is not corrupted by the creation of exotic financial instruments and dubious lending practises.

It is pretty stupid of the government to give the banks their own printing press and only attempt to regulate them. It was inevitably there would be a crash and now after the the driver (Chris’ regulatory mates) have done the bolt, they are back asking for a new turbocharged V8, well forgive me for not wanting to give them one.

People cannot follow this. You were trying to make a onesided point using just Soviet Union, NSW, and North Korea.

Why now try to pin all your hopes on the most extreme, non-representative case?

If your argument cannot be sustained by using your own choice of examples, including NSW, then there is something wrong with the rigor of your logic.

Jumping and changing like this is far too opportunistic to worry about.

People do not argue for any political or economic policy based on knowledge or events in North Korea. This is childish.

Anyway the substantive issue still remains – why pick NSW, Soviet Union and North Korea to construct a onesided argument and ignore Japan, America, and Iceland to see the other side?

A balanced approach is useful.

If I wanted to look at living standards (seeing as you have jumped there) – I would look at the sheer desperation of the many millions slaving away under capitalism in Africa, Bangladesh and elsewhere.

If your argument cannot be sustained by using your own choice of examples, including NSW, then there is something wrong with the rigor of your logic

Are you promoting the virtues of NSW and expanding them? Chris that is sophisticated.

I sympathise with people slaving away in Africa, Bangladesh and elsewhere, but excessive government is not going to help them. China is an example of how productively employed capital can increase living standards. I think they also rejected expanding the socialist model you are promoting Chris.

Alice correct (as usual, keep up the skeptical thinking, every idea should be challenged by asking for hard data),

The US is arguably unsavable now in its current form, Obama is Bush with a smile as Rudd is Howard with less personality. And, what in the past would have been extremely low probability events, are now becoming more probable by the day. Who would have imagined (except me, as I have privately predicted this to other people) that a Govr of Texas would openly talk about succession? How long now?

Similar Japan and the UK.

Now what is going to happen: left wing takeovers, right wing militaristic (my prediction for Japan = war) takeovers, breakup or military takeover of the US, watch Petraeus carefully, it must have crossed his mind and he really, I mean really, wants to become President, if it takes a few tanks what the heck.

Now this really is the end of the last 30 years of capitalism, but it is not going to end well. There will be military takeovers, war .. a lot of war .. actually a lot of war. Social breakdowns, starvation, death, et al.

So called ‘civilised and advanced’ countries will go under in large numbers. The Anglo Saxon nations and their emulators (ie Japan), historically the most brutal and warlike nations that have ever existed .. will return to their real roots.

Such as the UK. Hint, you don’t get the biggest empire in the World by being nice .. Hitler admired them, as gifted amateurs admire real professionals, .. need I say more. Now a brutal police state moving towards becoming the 21st century East Germany (where 30% of the population were informers).

So it is over, now the choices are:

(1) Become UK lite, as we did in the Great Depression, read your history books folks it was brutal. Actually that’s unfair to the UK, the GD was much worse and far more brutal in OZ that it was in the UK.

(2) Become US lite: breakdown, succession (if I was in WA I’d pull out tomorrow). Repression, then brutality. Don’t say it cannot happen, boat people anyone, that demonstrates the ‘inner brutality’ of our society, let alone the slow genocide of Aborigines that we practice (yes really it is). Plus we love war, name a war we have not been involved in the last 100 or so years … yes right. At heart this is not a ‘nice’ country or society.

(3) Become something else that is unique: to have a free and good society and be reasonably wealthy. Nah, that would require intelligence .. and Oz has worshipped at the alter of stupidity for far to long to break the habit now.

So bad, really bad times are coming. And there is sod all we can do to stop it, except, after we get out of the concentration, sorry detention, camps we will be needed to try and put the whole mess back together again (as Stalin did after Germany attacked).

“The US is arguably unsavable now in its current form…Now what is going to happen: left wing takeovers, right wing militaristic (my prediction for Japan = war) takeovers, breakup or military takeover of the US, watch Petraeus carefully, it must have crossed his mind and he really, I mean really, wants to become President, if it takes a few tanks what the heck.”

Fibre Optics helped to ship commoditised jobs to India which have lead to high economic growth and improving living standards for mny (but it is obviously not enough, just look at the poverty). Therefore third world gets improvements and the first world specialises in higher value adding goods. Might not be a complete win-win but it is better than before.

“Both of these are artificial competitive advantages, and the gains for the Third World, are unsustainable in the long run.”

They’re also just waypoints along the path of development. Lower RULCs attract investment and promote economic growth, wages rise and working conditions improve. See China. As people get richer, they get more concerned about their environment. Again, see China (a particularly horrible example of how lack of property rights worsens environmental outcomes).

With the weapons and concentrated segments of power out there now – consider even the drug cartels (that can barely be stopped from infiltrating the highest levels of government in a number countries) – outside the control of Obama and US govt even given the guns go south and the drugs go north.

Jarrah, what makes you accuse others of being “paranoid schizos” ?? (notwithstanding your comment had not a slither of an argument to go with it) for presenting realistically the ultimate outcomes of the failures of the capitalist system we see around us. It is indeed fairly inevitable that the market system will outrun the sustainability of its own ability to deliver resource inputs.

If you think people (individuals, commmunities, regions and nations) are not going to end up fighting with other people or engaging in war over access to resources – seriously it is you who are mistaken and could do with a bit of Oldskeptics skepticism.

Capitalism works fine when there are plenty of resources and not too many mouths to feed. Unfortunately as it progresses it fails to adequately protect the former whilst overproducing the latter. Capitalism is on a collision course with itself or humankind (or both) and that is the nature of it, unless you consider war and starvation an acceptable market adjustment for the perpetuation of capitalism.

If you think this form of “adjustment” (war, starvation etc) is fine then consider the advanced state of weaponry and quietly shudder (dose of a phosphorous bomb or some depleted uranium in the morning anyone? Check the child cancer rates in Southern Iraq – brain tumours, leukemias etc where depleted uranium was spread around in the first and second wars). Look at the offspring of Hiroshima or Chernobyl etc

There is nothing quite like the romanticism of “market or capitalism perfectionists” Jarrah but realism it aint.

Jarrah #85 said “As people get richer, they get more concerned about their environment.” ROFLOL!

You mean after they exploit and lay waste the ecosystem, paved and polluted it they eventually become a little bored with the Macmansion, boats and plasmas, look around and say, “where the bloody hell have all the trees gone?”

“Jarrah, what makes you accuse others of being “paranoid schizos” ?? ”

OK, I was being a tad harsh. I should not have used ‘schizo’, and I apologise. But it’s clearly paranoid nonsense (or bad satire) to predict a coup by Petraeus, or Japanese civil war.

“If you think people (individuals, commmunities, regions and nations) are not going to end up fighting with other people or engaging in war over access to resources”

I never said it wasn’t a possibility. A while ago I predicted water wars in Africa and Central Asia within 30 years. But I’m sceptical of Oldskeptic’s delusions of imminent “lot of war”, and your hand-waving about capitalism’s supposed future.

If you have the same good – eg a TV, and it is produced by oppressed labour at $10 hour (with one RULC) and another produced by Western labour at $100 per hour, then clearly, the oppressed labour artificially creates unfair comparative advantage.

Its pretty simple.

And if $10 TVs are imported into the West – unemployment (or wage cuts) increase.